2024 (9) TMI 622 - AT - IBC

Seeking recall of the order - liberty given by the Hon ble Supreme Court to file a review of the said order limited to the grounds of limitation - Rule 11 of NCLAT Rules. Whether in view of the facts and circumstances of the case, there are sufficient and cogent grounds for recall of the order of this Tribunal of 02.04.2024 at a time when liberty was given by the Hon ble Supreme Court to file a review of the said order limited to the grounds of limitation? - HELD THAT - The law as it stands today, this Tribunal in exercise of its inherent jurisdiction can entertain an application for recall of judgment on sufficient grounds. Inherent powers not being powers which are conferred expressly upon the Tribunal but are innate powers of the court which can be exercised to dispense justice between the parties subject to exercise of these powers not contravening or violating any express provision in the statute. In the present matter, the Adjudicating Authority considering the facts of the attendant case, has relied on the ratio of the judgment of the Hon ble Supreme Court in B.K. EDUCATIONAL SERVICES PRIVATE LIMITED VERSUS PARAG GUPTA AND ASSOCIATES 2018 (10) TMI 777 - SUPREME COURT to hold that for calculating the period of limitation in an application under Section 7 of the IBC, the date of default is significant and keeping in mind that the present Company Petition is filed within 3 years from the date of default, it held that the petition was within the period of limitation in terms of Article 137 of the Limitation Act. Similar view has been espoused again by the Hon ble Supreme Court in JIGNESH SHAH ANOTHER VERSUS UNION OF INDIA ANOTHER 2019 (9) TMI 1121 - SUPREME COURT wherein it held that the period of limitation for making an application under Section 7 or 9 of the IBC is three years from the date of accrual of the right to sue, that is, the date of default. Given the catena of judgments of the Hon ble Supreme Court which affirm the applicability of Article 137 of the Limitation Act in respect of Section 7 applications filed under IBC, we find that the contention of the Appellant that the present Section 7 application be held as time-barred under Article 21 of the Limitation Act is misconceived and untenable. Given the catena of judgments of the Hon ble Supreme Court which affirm the applicability of Article 137 of the Limitation Act in respect of Section 7 applications filed under IBC, it is found that the contention of the Appellant that the present Section 7 application be held as time-barred under Article 21 of the Limitation Act is misconceived and untenable. The Adjudicating Authority did not commit any error in holding that the Company Petition was not barred by limitation - there are no error in the order of the Adjudicating Authority holding that the application is well within time - there is no merit in the recall application - application is dismissed.

Summary

Issues Involved:
1. Recall of the Tribunal's order dated 02.04.2024.
2. Application of Limitation Act to Section 7 petitions under IBC.
3. Procedural error in delivering the judgment.
4. Jurisdiction and inherent powers of the Tribunal to recall its orders.

Detailed Analysis:

1. Recall of the Tribunal's order dated 02.04.2024:
The Appellant filed I.A. No. 4373 of 2024 under Rule 11 of NCLAT Rules seeking recall of the order dated 02.04.2024, which dismissed the appeal challenging the NCLT Mumbai Bench's order dated 06.12.2022. The NCLT had admitted the Section 7 application against Tarapur Textile Park Ltd into Corporate Insolvency Resolution Process (CIRP). The application was filed following the Hon'ble Supreme Court's order dated 06.05.2024, which allowed the Appellant to seek a review of the impugned judgment on the ground of limitation.

2. Application of Limitation Act to Section 7 petitions under IBC:
The Appellant contended that the Section 7 application was barred by limitation as the financial debt was disbursed on 01.01.2014, and the limitation period ended on 01.01.2017. The Appellant argued that the application filed on 20.02.2018 was time-barred. The Appellant relied on the judgment in B.K. Educational Services Pvt. Ltd. Vs. Parag Gupta Associates, asserting that time-barred debts cannot be revived under IBC. The Respondent countered that the application was within the limitation period as per Article 137 of the Limitation Act, with the default date being 15.03.2016, making the petition filed on 24.10.2018 timely.

3. Procedural error in delivering the judgment:
The Respondent argued that the recall application was not maintainable as the Supreme Court had granted liberty to file a review, not a recall application. The power to recall can be exercised only for procedural errors, and the issue of limitation is not a procedural error. The Appellant argued that the Tribunal has inherent powers to recall its orders, citing Budhia Swain & Ors. Vs. Gopinath Deb & Ors.

4. Jurisdiction and inherent powers of the Tribunal to recall its orders:
The Tribunal examined its inherent powers to recall orders, referencing its judgment in Union Bank of India Vs. Dinkar T. Venkatasubramanian and others, upheld by the Supreme Court. The Tribunal has inherent power to recall judgments on appropriate grounds, such as procedural errors or fraud. The Tribunal acknowledged the Supreme Court's liberty to raise the issue of limitation and decided to entertain the recall application under exceptional circumstances to ensure justice.

Conclusion:
The Tribunal concluded that the Adjudicating Authority had correctly applied Article 137 of the Limitation Act, holding the Section 7 application within the limitation period. The Tribunal found no procedural error or merit in the recall application, affirming that the Company Petition was not barred by limitation. The application was dismissed.